China's labour pains: slower economic growth and a cooling job market
As manufacturing falls, stability in labour force will depend on innovation and reforms, experts say
On a recent sunny morning in Beijing, the Chuangxiang job fair was mostly deserted, despite its prime location in Zhongguancun, a cradle of technology start-ups and home to dozens of universities. Several hiring officers stood around chatting, while others sat quietly, looking bored.
Another larger market near the famous Yonghegong Lamasery on the east side of the capital had about two or three visitors at each stand. Even so, about a quarter of the stands did not seem to be leased. Seasonal factors could be at play and some people preferred to search for jobs online, said Zhang Qin, Chuangxiang's marketing manager, but added: "The market is cooling in general."
Zhang's sentiment was echoed by the deputy labour minister Xin Changxing yesterday, who said he was confident of keeping the employment rate stable, but could not be blindly optimistic about job creation.
The urban unemployment rate ticked down slightly to 4.05 per cent at the end of March, from 4.1 per cent at the end of last year, the labour ministry said. The government aims to keep the urban jobless rate below 4.5 per cent.
Job-shedding across the manufacturing sector, as indicated by the HSBC flash purchasing managers index for April, was the worst in 18 months. Data collected among public job services agencies showed both the number of new positions and jobseekers declined more than 15 per cent from a year earlier.
"In recent years, China has seen a rare coexistence of a slide in the economic growth rate and shortage in the labour force," said Chi Hung Kwan, a senior researcher at Nomura's Institute of Capital Markets Research. "The shift of China's labour supply from excess to shortage should be the biggest reason dragging down economic growth."
"China must rely on boosting productivity to sustain economic development", with innovation the key to the solution, he said.
While the mainland's jobless rate - widely seen as unreliable and incomplete as it excludes much information about migrant workers - has held steady, economists said the downside risks on the job market might intensify in the longer term.
The government aims to create 10 million new jobs this year. The first-quarter economic growth that slumped to a six-year low of 7 per cent may be sufficient to generate that many jobs, analysts say. But a further slide could sound the alarm to the leadership that treats protecting jobs and social stability as its top priorities.
Last year, the National Bureau of Statistics reported that the working-age population fell by 3.7 million, the third consecutive year of decline.
There have also been structural problems in the labour market. For example, the mainland has yet to create enough positions for higher-educated job hunters, including university graduates, who are expected to number 7.5 million this year.
Xin said the country was facing great pressure to create jobs for them.
"[We] need to create a relaxed and convenient environment for new entrepreneurs, or reduce the start-up cost, and help them with fundraising and other problems," Xin said.
Premier Li Keqiang has introduced various measures to support employment, including offering a favourable tax policy and fiscal subsidies and encouraging graduates to start their own businesses. These measures, as well as the rising role of services in the economy, would help bolster employment, said Li Zuojun, a senior researcher at the Development Research Centre of the State Council. But he added: "The biggest problem with China's job market has been the barriers that hindered a free labour float across different regions."
Li urged Beijing to deepen reforms on social security and the household registration system to facilitate easier movement of labour. But the services sector might not expand and create jobs fast enough to offset the impact of an economic downturn, analysts say.
A property services manager in Beijing and a private garment manufacturer and exporter based in Henan province both complained about difficulties in finding workers of suitable age and skill sets. "It's getting harder and harder to find and retain office-building guards aged between 18 and 35. Some young people only stay for one or two months and leave," the manager said. "It's a common problem facing the whole industry."
The government has urged the coastal regions to upgrade industries, while encouraging lower-end manufacturing facilities to relocate to poorer regions.
To attract workers, Xu said he had to double wages - to an average of 2,500 yuan (HK$3,165) a month from 1,200 yuan five years ago. That's about five times what's offered in Vietnam, he said. There was little room for any further wage rises as export orders kept sliding while margins were only 3 per cent to 5 per cent.
